The collection of taxes are very important because it’s an avenue where federal government generates their revenue. As a business owner, paying your taxes will help the government in nation building and infrastructural development.
All registered businesses in Nigeria must pay the company income tax (CIT), while those in venture and partnership business are to pay the personal income tax (PIT).
In Nigeria, tax are administered in the three tiers of government. But for the taxes which are to be paid to the federal government is being controlled by the federal Inland Revenue service which is known as FIRS. For taxes which are payable to the state government, is being controlled by the state board of internal revenue (SBIR) which are located in every state of the country. The local governments get theirs through levies which they collect through councils.
A tax certificate is given to companies who have fully paid their taxes as at when due. A certificate of tax clearance is one of the requirement document for any company to do an official business transaction with any government agencies, departments and ministries.
Here Are Taxes That Are Applicable To Nigerian Companies
|Tax Applicable||Rate of Tax||Governing Legislation|
|Companies Income Tax (CIT)||30 percent of the total companies’ profits||The companies income tax Act|
|(VAT) Value Added Tax||The 5 percent value of any supply of goods and services||The value added tax Act|
|The capital gain tax (CGT)||The 10 percent gain from any company disposal of any chargeable property and asset||The capital gain tax Act|
|The education tax||The 2 percent of the assessable profits in any company||The education tax Act|
The Income Tax Regulations
The multinational companies with a total group revenue that exceeds the N160 billion mark, who have their parent company in Nigeria for any tax issue will be asked to file a report to federal Inland Revenue services (FIRS) in accordance to their accounting year report.
Please note that the accounting report must have:
A proof of each subsidiary of the multinational group outlining the tax of jurisdiction of each subsidiary company where under the laws the subsidiary company operates, and the kind of business activity they operates or the activities of such subsidiary company.
All information regarding to the total amount of revenue, income tax which is accrued, profit and loss of the group before the payment of income tax, the accumulated company earnings, the states capital, the number of employees, and any physical asset that is not cash or its equivalent in relation to each jurisdiction in which the multinational operates.
How To Pay Or Remit Company Income Tax
The federal Inland Revenue services (FIRS) has finally implement an e-filling system which will enable companies file all their income taxes. This new system will eliminate the stress of companies who operate in Nigeria from going to the FIRS office just to file company income taxes.
Here Is The Steps To Follow:
- Visit their portal at firs.gov.ng
- Click the e-service link
- Click on e-filling
- Download the form and fill the income tax details
- Scan the completed form and all document, then send it to any FIRS office close to you
Note that the FIRS portal has a tax calculator which will help you know how much tax your company have to pay.